Getting a divorce is undoubtedly stressful for all parties, but being proactive with your finances can minimize personal heartaches and litigious headaches. Understanding how getting divorced can impact your estate plan is critical in ensuring you are prepared to manage your future.
Navigating the legal landscape
State laws surrounding what financial steps you can take during a divorce are diverse and complex.
For example, certain states may allow major revisions to your will or trust prior to or in the middle of divorce proceedings while others have more restrictive laws that make you wait until the legal dust settles.
Seeking out the most up-to-date information on what your state allows in terms of financial revisions during divorce can alleviate stress and help you make the most informed decisions.
Updating and reviewing major financial documents
Getting a divorce will significantly alter several important financial decisions you have made—often with your soon-to-be-ex. The first step is to review power-of-attorney clauses in your major documents. This is one legal snarl you can address before the divorce is finalized.
Amendments to your will, such as revising money and property provisions for your spouse, however, may be constrained by your state’s laws. If you have children with your spouse, it’s also important to consider guardianship clauses and if they still make sense following divorce.
Similarly, going through a divorce may impact the terms of a living trust you’ve established, so be sure to update and review your trust paperwork so that you maintain control.
Consulting and seeking advice
Working through the intricate steps of estate planning during divorce can feel overwhelming, so consider seeking neutral professional advice. Securing a trusted lawyer skilled in divorce cases can be invaluable.
For example, simply changing your will might not affect the beneficiary designations on assets such as retirement accounts, life insurance policies, and investment accounts. Naming beneficiaries can be tricky, so consider all your options to determine what makes the most sense for your circumstances.
Institutions associated with these various financial accounts will have experts on hand to answer your questions, so be sure to educate yourself and ask lots of questions.